How Does Empower Make Money?
A Complete Breakdown of Empower’s Revenue Model, Business Strategy, and Financial Services Profitability in 2026
1Introduction
Empower has established itself as one of the leading providers of retirement and wealth management services in the United States, transforming how employers and individuals manage their financial futures. With over $2 trillion in assets under administration for more than 19.5 million individuals, Empower has fundamentally changed the retirement services landscape. But how does Empower make money from managing workplace retirement plans and personal wealth?
Understanding how Empower generates revenue is crucial for potential investors, financial advisors, employers evaluating retirement plan providers, and anyone interested in financial services business models. In February 2026, Empower announced record financial results for 2025, achieving base earnings of $1.1 billion, an 11% increase from 2024. The company now administers approximately 89,000 employer-sponsored retirement plans on behalf of 61,000 employers.
This comprehensive guide breaks down exactly how Empower makes money, exploring their multiple revenue streams, fee structures, and the strategic decisions that drive their profitability. Whether you are researching the Empower revenue model for investment purposes or seeking to understand financial services monetization strategies, this analysis provides actionable insights into one of the most successful retirement and wealth management businesses in the market.
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2What Is Empower?
Empower operates as a comprehensive financial services company specializing in workplace retirement solutions and personal wealth management. The company serves two primary customer segments: employers offering retirement benefits to their employees, and individual investors seeking personalized financial advice and investment management. Unlike robo-advisors that focus solely on digital investment management, Empower combines technology with human financial advisors to deliver holistic financial planning services.
The company operates through two main business units:
- Empower Workplace Solutions: Manages employer-sponsored retirement plans including 401(k), 403(b), and other defined contribution plans
- Empower Personal Wealth: Provides individual wealth management services, financial planning, and investment advisory services
Empower’s value proposition centers on expanding access to financial advice and helping people navigate increasingly complex financial decisions. The company handles retirement plan administration, investment management, financial planning, and recordkeeping services, charging fees based on assets under administration and management.
3How Does Empower Make Money?
Empower’s revenue model is built on multiple fee-based streams derived from assets under administration (AUA) and assets under management (AUM). The company acts as both a retirement plan administrator and a registered investment advisor, generating revenue through administrative services, investment management, and advisory fees. This diversified approach allows Empower to capture value across the entire spectrum of retirement and wealth services.
ARetirement Plan Administration Fees (Primary Revenue)
The largest portion of Empower’s revenue comes from administering workplace retirement plans. As one of the largest retirement plan providers in the United States, Empower charges fees for recordkeeping, plan administration, and participant services:
Workplace Solutions Revenue Model
| Service | Description | Revenue Structure |
|---|---|---|
| Plan Recordkeeping | Maintaining plan records, transactions, and compliance | Per-participant fees + asset-based fees |
| Plan Administration | Managing plan operations, testing, and reporting | Asset-based administration fees |
| Participant Services | Customer support, education, and online access | Per-participant monthly fees |
| Investment Options | Managing menu of investment choices | Revenue sharing from fund providers |
Revenue Mechanics: Empower charges employers and plan participants fees based on the number of plan participants and total assets in the plan. These fees are typically calculated as a percentage of assets under administration, ranging from 0.50% to 1.50% annually depending on plan size and services provided.
In 2025, Empower’s Workplace Solutions business generated $23 billion in net plan flows and added approximately 500,000 net new plan participants, representing a 3% increase over the prior year. Average AUA growth in this unit was 12%.
BWealth Management Advisory Fees
Through Empower Personal Wealth, the company generates significant revenue from investment advisory services. These fees are based on assets under management and follow a tiered pricing structure:
Empower Personal Strategy Fee Schedule
| Asset Tier | Annual Advisory Fee | Service Level |
|---|---|---|
| First $1 million | 0.89% | Access to advisory team |
| $1 million – $3 million | 0.79% | Enhanced planning services |
| $3 million – $5 million | 0.69% | Comprehensive wealth management |
| $5 million – $10 million | 0.59% | Priority advisor access |
| Over $10 million | 0.49% | Dedicated private client services |
Minimum Account Size: $100,000 to open an advisory account. The advisory fee is all-inclusive, covering portfolio management, financial planning, access to certified financial planners, tax optimization strategies, and goal-tracking tools.
Empower Personal Wealth achieved 23% growth in average AUA in 2025, with positive net flows driven by success serving clients from defined contribution plans and growing demand for personalized advice.
CInvestment Fund Revenue Sharing
Empower earns additional revenue through revenue-sharing agreements with investment fund providers:
Revenue Sharing and 12b-1 Fees
When Empower includes specific mutual funds or investment products in their retirement plan menus or advisory portfolios, they may receive revenue sharing payments from fund providers. These payments, typically ranging from 0.25% to 0.50% of assets invested in the funds, compensate Empower for recordkeeping and administrative services. While these fees do not increase costs to participants, they represent an important revenue stream for the company.
DTrading and Transaction Fees
While Empower emphasizes low-cost investing, certain transactions generate fee income:
- Brokerage Commissions: The first 1,000 online trades per calendar year are $0; thereafter, each online trade is charged $6.95
- Mutual Fund Transaction Fees: Fees for buying or selling certain no-transaction-fee funds
- Wire Transfer Fees: Charges for outgoing domestic and international wire transfers
- Account Service Fees: Fees for paper statements, account closures, and special services
ECash Management and Interest Income
Empower generates revenue from cash held in client accounts:
Cash Sweep Program Revenue
Cash balances held in Empower accounts are typically swept into interest-bearing deposit accounts or money market funds. Empower earns a portion of the interest spread between what is paid to clients and what is earned on these cash balances. With billions of dollars in client cash holdings, this represents a meaningful revenue stream, particularly in higher interest rate environments.
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4Detailed Revenue Model Breakdown
ABusiness Model Mechanics
Empower operates on a scale-based model where revenue grows with assets under administration and management. The company benefits from natural market appreciation, net new client acquisition, and positive net flows from existing clients. This creates a compounding effect where revenue grows even without new sales, though Empower continues to add new plans and clients aggressively.
The platform serves multiple customer segments with different revenue characteristics:
| Segment | Description | Revenue Driver |
|---|---|---|
| Large Employers | Fortune 500 companies and major institutions | High asset volumes, lower fee percentages |
| Mid-Market Employers | Companies with 100-5,000 employees | Core revenue base, standard fee structures |
| Small Businesses | Startups and small employers with 401(k) plans | Higher per-participant fees |
| Individual Investors | High-net-worth and mass-affluent clients | Advisory fees on AUM |
| Plan Participants | Employees in workplace retirement plans | IRA rollovers, advisory conversions |
BPricing Model Evolution
Empower’s pricing strategy has evolved to remain competitive while maintaining profitability. The company has implemented fee compression in the retirement industry by leveraging technology and scale. However, they have maintained advisory fees at competitive levels (0.89% starting rate) that reflect the value of human advisor access combined with digital tools.
CScaling Profits
Empower’s business model demonstrates strong operating leverage. As assets grow, fixed costs are spread over a larger base, improving margins. In 2025, Empower achieved record pre-tax base operating margins in Empower Personal Wealth, with base ROE increasing from approximately 18.1% to 20.1% over the past year.
5How to Make Money With Empower
While Empower the company makes money through fees, individuals and businesses can leverage the platform for financial growth and savings:
AUsing Empower Personal Wealth for Investment Growth
Individual investors can access professional wealth management:
- Professional Portfolio Management: Access to fiduciary financial advisors and certified financial planners
- Tax Optimization: Tax-loss harvesting and asset location strategies
- Low-Cost Funds: Average expense ratio of 0.07% on underlying investments
- Comprehensive Planning: Retirement, estate, tax, and insurance planning included
While fees start at 0.89%, the value of professional advice and tax optimization can offset costs for investors with complex financial situations.
BEmployer Retirement Plan Benefits
Companies can offer Empower workplace retirement plans:
- Attractive Employee Benefit: Help recruit and retain talent with quality retirement benefits
- Administrative Relief: Empower handles plan administration, compliance testing, and reporting
- Cost Efficiency: Scale allows competitive pricing for plan sponsors
- Employee Education: Financial wellness programs and retirement planning tools
CFree Financial Dashboard Tools
Even without paid advisory services, individuals benefit from:
- Net Worth Tracking: Aggregate view of all financial accounts
- Investment Checkup: Free analysis of portfolio allocation and fees
- Retirement Planner: Tools to project retirement readiness
- Cash Flow Analysis: Budgeting and spending categorization
DCareer Opportunities
Financial professionals can join Empower as:
- Financial Advisors: Part of 1,500+ advisor network serving clients nationwide
- Retirement Specialists: Supporting workplace plan participants
- Technology Roles: Building and maintaining digital platforms
6Is Empower Profitable?
Yes, Empower is highly profitable. The company reported record base earnings of $1.1 billion for 2025, an 11% increase from 2024. Q4 2025 showed particularly strong performance with 17% base earnings growth. The company achieved record pre-tax base operating margins in its Personal Wealth unit.
ARevenue Insights
Empower’s revenue growth demonstrates the strength of their diversified model:
| Metric | 2025 Performance | Growth Driver |
|---|---|---|
| Base Earnings | $1.1 billion | 11% year-over-year growth |
| Q4 Base Earnings Growth | 17% | Strong markets, new client acquisition |
| Workplace AUA Growth | 12% | Net plan flows and market appreciation |
| Personal Wealth AUA Growth | 23% | Net new assets of 14% |
| Base ROE | 20.1% | Improved from 18.1% prior year |
The company added approximately 500,000 net new plan participants in 2025, demonstrating strong growth in the workplace solutions segment.
BGrowth Potential
Empower continues investing in growth through innovation, scale, and advice delivery:
- Plan Participant Conversion: Converting workplace plan participants to personal wealth clients
- Technology Innovation: Enhancing digital-first engagement tools
- Advisor Expansion: Growing the network of financial advisors
- Market Expansion: Targeting mid-market and large employer segments
7Pros and Cons of the Business Model
Advantages
- Recurring revenue from long-term retirement plan contracts
- Sticky customer relationships with high switching costs
- Operating leverage improves margins as assets scale
- Diversified revenue across workplace and personal wealth
- Strong competitive position in retirement services
- Natural growth from market appreciation and participant contributions
Challenges
- Fee compression pressure in the retirement industry
- Regulatory changes affecting retirement plan fees
- Market volatility impacts AUA and revenue
- Intense competition from Fidelity, Vanguard, and Charles Schwab
- High account minimums ($100,000) limit personal wealth market
- Dependence on employer decisions for workplace plan growth
(See also: How Does Fidelity Make Money With No Fees? Revenue Model Explained 2026)
8Frequently Asked Questions
Empower offers a free financial dashboard as a marketing tool to attract potential wealth management clients. The company makes money through advisory fees on assets under management (starting at 0.89% for Personal Strategy), retirement plan administration fees charged to employers and participants, revenue sharing from investment funds, and interest on cash balances. The free dashboard serves as a lead generation tool for their paid advisory services.
Empower Personal Strategy charges tiered annual advisory fees based on assets under management: 0.89% on the first $1 million, 0.79% on amounts between $1-3 million, 0.69% on $3-5 million, 0.59% on $5-10 million, and 0.49% on amounts over $10 million. The minimum account size is $100,000. These fees include portfolio management, financial planning, access to advisors, and tax optimization strategies.
Yes, Empower is highly profitable. In February 2026, the company announced record 2025 results with base earnings of $1.1 billion, an 11% increase from 2024. Q4 2025 showed 17% base earnings growth. The company achieved a base return on equity of 20.1%, up from 18.1% the previous year, demonstrating strong profitability and operational efficiency.
Empower differs from Vanguard and Fidelity by focusing on a hybrid model that combines digital tools with human financial advisors. While Vanguard and Fidelity offer lower-cost self-directed options, Empower emphasizes personalized advice with a 0.89% starting fee. Empower’s strength is in workplace retirement plan administration and converting those participants to wealth management clients. Vanguard and Fidelity have broader retail reach and lower average expense ratios for self-directed investors.
Empower Personal Strategy requires a minimum of $100,000 in investable assets to open an advisory account. This high minimum reflects its positioning as a wealth management solution rather than a basic robo-advisor. For investors with less than $100,000, Empower offers free digital financial tools including budgeting, retirement calculators, and net worth tracking, but full advisory services require meeting the minimum threshold.
Empower offers commission-free trading for the first 1,000 online trades per calendar year. After that threshold, each online trade costs $6.95. There are no commissions for trading most ETFs and mutual funds within advisory accounts, as these are included in the advisory fee. However, certain transactions like wire transfers, account closures, and paper statements may incur fees.
9Final Thoughts
Understanding how Empower makes money reveals a sophisticated financial services business model that combines scale, technology, and human advice. By administering over $2 trillion in assets and generating $1.1 billion in base earnings, Empower has demonstrated the profitability of integrating workplace retirement services with personal wealth management. The Empower revenue model shows how fee-based advisory services can create sustainable, growing income streams.
For entrepreneurs, Empower’s success offers valuable lessons: leverage technology to achieve scale, use free tools as customer acquisition channels, and build sticky relationships through comprehensive service offerings. For investors and employers, Empower provides legitimate value through professional management, though the fee structure requires careful evaluation against lower-cost alternatives.
As Empower continues evolving, expanding its advisor network, and enhancing digital engagement tools, its core principle remains unchanged: Empower makes money by helping individuals and organizations build financial security through retirement plan administration and wealth management services, capturing value through asset-based fees that align the company’s success with client growth.
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